Whether you are a national law practice or a small local firm, one of the key decisions that must be made will be the succession of the managing partner. It is 100% certain that this will happen at some point if the firm is to continue … it’s just a matter of when and to whom!
The Importance of Early Succession Planning
The earlier a law firm begins succession planning, the smoother the transition is likely to be. So, when should these discussions start within the firm? The answer is simple: as soon as possible.
Retirement Dates and Tenure Periods: Facilitating Succession Planning
Some firms have a retirement date in their constitution. This can make the planning easier as it forces the discussion and the inevitable debate to happen. Often the larger firms have a set period for the managing partner to be in post, say three to five years. This can also make planning easier, if only because it sets the clock running towards a point in time, but of course it begs questions about what the outgoing managing partner will do after their term has ended.
Succession Processes and Working Parties
May larger firms often have a process outlined for managing partner succession. If there is no process in place, then introducing one can smooth the process. Perhaps forming a small working party of partners to consider the potential candidates from within could help?
Succession Planning in Smaller Firms
In smaller firms, little consideration is often given to what happens when the managing partner seeks to retire. Early discussion with other partners in the firm should be encouraged, setting out a clear timeline and what should be expected of the successor. As above it’s possible that a small group of partners could be formed specifically with a view to making recommendations for the successor.
A shadow programme can often work well leading up to the succession date, and potentially also afterwards with the former managing partner staying on in a mentoring role. It can make it much easier if the incoming managing partner has had experience of running the practice, either as number two, COO or as a board member. If the likely candidate is not in one of those positions, it is worth considering doing so in the year or two leading up to a decision to enable them to upskill and also for both the candidate and the rest of the partners to see whether it is likely to work out with them at the helm.
When There’s No Clear Successor
What if there is no readily identifiable successor or the business is a sole practitioner? The managing partner should be able to recognise this and may wish to seek a sale or merger. Planning for this is crucial in ensuring the best possible outcome for the retiree and the ongoing firm.
The Bottom Line: Early Planning and Discussion
The key takeaway of all of the above is early planning and discussion. Without this, the potential successors may not wait and could choose to look elsewhere to further their career, potentially causing damage to the practice they will have helped to build and to those left behind.
If you would like help and support about the succession of your law firm, big or small, please call 0808 144 5575 or email help@armstrongwatson.co.uk.
